How to Prevent the Construction
of Nightmare New Homes
Joseph R. Mariniello, Jr.

So picture this....You have just retired...you have sold your family home, it being way to

As the rate of new home construction has increased so has the number of homeowners who have suffered from poor or incomplete construction work.

big for just you and your spouse, too much work to maintain. You opt to purchase a home in a new community being built, maybe a 55 and over community where you will have an immediate social life. The brochures are simply amazing and the model is dynamite. The saleswoman told you she would need a deposit today as there were just a few homes left. Not wanting to miss an opportunity, you write a check and begin dreaming of your new retirement community.

The SCI found instances where inspectors were working in up to six municipalities at once.

What happens next is a living nightmare. Maybe the builder disappeared in mid-construction. Perhaps the subcontractors abandoned the job refusing to come back until they are paid. Now you are living in a motel for six months with all your possessions in a paid storage facility waiting for the house to be completed.

Or, maybe the construction process went very smoothly. That is, until you moved in. That is when you find out that the house was built two feet short, that your foundation is cracked or your roof trusses are unattached to the rest of your home. Your garage doesn't fit the mid-size sedan you just bought. Maybe the tiles in your kitchen are cracking or the water in your basement is causing dangerous mold. Maybe you find out that the proper fire walls were never installed and you are concerned about your neighbor, the chain smoking narcoleptic.

Whatever the issue, it certainly was not what you bargained for that day you first visited the model homes, when Ms. Saleswoman told you about the paradise you were moving to. Now you can't find anyone to help you. The builder is either long gone or too busy putting up the other homes to be concerned with your problem. The town inspection office can not understand why these problems exist when their records show the house was inspected. Of course, it doesn't help that the town has no "as-built" plans for your home on file.

A common theme echoed by many of the builders revolved around the lack of resources in local municipalities to provide effective and timely inspections.

These are just some of the scenarios new home buyers in New Jersey have endured over the last decade. On March 31, 2005, the New Jersey State Commission of Investigation (SCI) released the findings of an investigation concerning the many facets of new home construction in New Jersey. The report, titled "The Good, the Bad and the Ugly, New Home Construction in New Jersey" was driven by the numerous complaints of new home purchasers in the state, many of whom invested their life's savings into a newly constructed home. The result of these complaints was a comprehensive review of the many facets of the new home construction process, including municipal inspectors, builders, and the department of community affairs, all of which play a key role in the many failures of the industry.

The report contains extensive recommendations on how to improve the system to prevent horror stories such as those heard by the SCI. The recommendations call for changes in legislation such as creating a "Lemon Law" for new home buyers and including new home construction under the covered purchases in the Consumer Fraud Act. Regulatory and staffing reforms are needed to insure that the Department of Community Affairs upholds its responsibility to oversee the inspection process and create a more protective New Home Warranty Program.

While the legislative and regulatory changes outlined in the report are necessary, the biggest impact on homeowners can come from changes made at the most local levels. A common theme echoed by many of the builders revolved around the lack of resources in local municipalities to provide effective and timely inspections. Builders provide thousands, and in some cases hundreds of thousands of dollars, in inspection fees to build a project yet they are building at a rate which the inspectors simply can't keep up. The result is either very poor inspections or no inspection at all, just a stamp of approval.

The report, titled "The Good, the Bad and the Ugly, New Home Construction in New Jersey" was driven by the numerous complaints of new home purchasers in the state, many of whom invested their life's savings into a newly constructed home.

Some of the most basic changes can be done now, by municipalities without having to wait for legislative or regulatory reform. These include:

Budget Appropriately The SCI report recommended that all construction/inspection departments be funded by "rider" rather than having permit fees directed to the municipality's general fund. This recommendation would not have been necessary had so many examples of poor use of funds been found. Inspectors explained that, particularly in towns where one or more production builders were building at the same time, they simply did not have the resources to keep up. Their request for more inspection help fell on the deaf ears of their governing bodies. Municipalities which previously experienced new home construction at very low rates expected their offices to do effective inspections with the same level of personnel when the workload more than tripled. It is simply impossible. But impossible is a word no one wants to say. So instead, the institution of "drive by" inspections began.

A municipality usually knows months in advance that a large subdivision is going to be built. Appropriately budgeting for increases in staff in the inspection office is necessary. The funds will come in, inspection and permit fees generate hundreds of thousands of dollars when new production builders enter a town. Builders expect there to be inspectors present when required to do the appropriate inspection. The would-be homeowner expects the same. Failure to recognize this need directly leads to homes built improperly and angry, unsatisfied homeowners.

Hire Inspectors Carefully Municipalities must do a better job in their hiring process for code officials, starting with the Construction Code Official ("CCO") itself. The SCI heard countless CCO's explain that they lacked the authority to contradict the decisions of their sub-code's because they did not hold the same license as the sub-code and were left to accept that official's determination. That is simply inexcusable.

The CCO should hold as many licenses as possible to avoid scenarios such as the one discussed above. Good planning should allow for a CCO to act as an oversight for his subcode officials, or at the very least, a second opinion for them to turn to when grey areas arise.

Another issue was the hiring of part-time officials who held several positions in various towns. It is simply impossible for them to do the work necessary. The SCI found instances where inspectors were working in up to six municipalities at once.

Report and Document Problem Inspectors In several instances, CCO's explained to the SCI that they were powerless to do anything with inspectors not doing their job, either due to physical inability, insubordination or outright laziness. This circumstance must not be allowed to occur. Like any employment action, its success is due in large part to the appropriate documenting of the problem. Reporting that individual and his/her actions to the municipal authority and the DCA is necessary to support an action to suspend or revoke the official's license. Allowing it to continue with no documentation or reasoning that it is not in your province to concern yourself with it because you don't hold that subcode license exacerbates the problem.

Ethical Reminders. Municipal employees must be reminded of their ethical obligations. A yearly memo, most effective around the holiday season, should be sent out reminding employees that they are not to accept gifts of any kind from persons or entities doing business with the town. Flowers, alcohol, trays of food, invitations to golf outings or sporting events should not be accepted from anyone, including builders looking to curry favor with the personnel in the construction office.

While the vast majority of construction office personnel operate an ethical manner, some were found to be using their position to fill their own personal coffers or using the builders to further their own gain. In fact, the SCI's report has led to at least four indictments of officials who used the powers of their offices inappropriately. Municipalities must monitor these officials closely.

Thousands of homes have been built in New Jersey over the last decade, the vast majority without incident. Responsible builders and knowledgeable building inspectors have contributed to a booming market for new homes in New Jersey. Despite this boom, thousands of homeowners experienced substantial problems in their very expensive new homes. While the executive and legislative branch of state government must take their time to craft appropriate responses to the SCI's report, municipal officials should act now to avoid the construction of money pits in their towns.

Joseph R. Mariniello, Jr., Esq. is a Commissioner for the New Jersey State Commission of Investigation and has been since 2002. He has been practicing municipal law as a member of the firm Mariniello & Mariniello, P.C. in Fort Lee, New Jersey for over 10 years.